After losing $1 billion in the third quarter of 2005, XL Capital last night beat analysts? expectations when it turned a profit of more than $400 million.

XL said it had net income of $415.8 million or $2.32 per share compared to a $1.04 billion or $7.53 a share loss in the three months to September 30, 2005.

Net income excluding net realised gains and losses for the third quarter was $468.2 million, or $2.61 per ordinary share, compared with a net loss of $1.12 billion, or $8.01 per ordinary share, for the prior year period.

The company was expected to make $2.13 a share, according to the average estimate of 21 analysts in a Thomson First Call survey.

XL chief executive Brian O?Hara said all five of the insurer?s business segments, along with investment operations, contributed to a record quarter for XL.

?Our book value rose by over 12 percent this quarter and our return on equity of 22 percent was exceptional, demonstrating the success of XL?s risk management, underwriting and investment disciplines,? he said.

XL?s segmented earnings were as follows: General insurance underwriting profit Underwriting profit $85.6 million (2005: -$625.7 million); General reinsurance underwriting profit $119.6 million (2005: -$738.2 million); Life operations $15.2 million (20005: $11.2 million); Financial lines contribution $27.8 million (2005: $24 million); and Security Capital Assurance profit $20.6 million (2005: $27.1 million).

SCA was spun off in an initial public offering. XL retains a minority interest.

Total operating expenses were $276.4 million in the quarter, up from $262.3 million in the prior year quarter.

Income from investments, including interest on bonds and dividends on stocks, climbed 41 percent to $518.3 million on higher yields and a bigger asset base.